Gas pipeline with Iran shelved, says Pakistan minister

Islamabad: The $1.3 billion Iran-Pakistan gas pipeline has been shelved because of sanctions against Tehran, dealing a blow to Islamabad's efforts to access cheap energy sources to overcome a crippling power crisis.

"In the absence of international sanctions the project can be completed within three years, but the government cannot take it any further at the moment because international sanctions against Iran are a serious issue," Petroleum Minister Shahid Khaqan Abbasi said.

The agreement for the pipeline was signed in 2009 but work on the project inside Pakistan could not be started, Abbasi said during Question Hour in the National Assembly or lower house of parliament yesterday.

The pipeline cannot be completed until sanctions against Iran are lifted, he said. The project's design is complete and bids were floated but nobody participated, he added.

"The main reason for the delay in executing the project is imposition of sanctions against Iran and since the situation continues, purchase of gas from Iran was not possible," Abbasi said.

Former president Asif Ali Zardari and his then Iranian counterpart Mahmoud Ahmadinejad had announced the project in February last year. Officials had said at the time it would be completed in 15 months.

Analysts doubted the current PML-N government's sincerity in following up the venture because of close ties between the party's leadership and Saudi Arabia, which is "reported to be against the project", the Dawn daily reported.

Pakistan will have to pay a penalty if it fails to lay the pipeline within its territory by December but Abbasi told the House that Islamabad has been trying to persuade Tehran to review the timeline for the project.